2016/10/31/(Mon)

Notice of Agreement to the Integration of Container Shipping Businesses [Shipping Line]

Kawasaki Kisen Kaisha, Ltd., Mitsui O.S.K. Lines Ltd., and Nippon Yusen Kabushiki Kaisha haveagreed, after the resolution by the board of directors of each company held today, and subject toregulatory approval from the authorities, to establish a new joint-venture company to integratethe container shipping businesses (including worldwide terminal operating businesses excludingJapan) of all three companies and to sign a business integration contract and a shareholdersagreement.1. BackgroundAlthough growing modestly, the container shipping industry has struggled in recent years due toa decline in the container growth rate and the rapid influx of newly built vessels. These twofactors have contributed to an imbalance of supply and demand which has destabilized theindustry and has created an environment that is adverse to container line profitability. In order tocombat these factors, industry participants have sought to gain scale merit through mergers andacquisitions and consequently the structure of the industry is changing through consolidation.Under these circumstances, three companies have now decided to integrate their respectivecontainer shipping on an equal footing to ensure future stable, efficient and competitive businessoperations.The new joint-venture company is expected to create a synergy effect by utilizing the bestpractices of the three companies. And by taking advantage of scale merit of its vessel fleettotaling 1.4 million TEUs, realize integration effect of approximately 110 billion Japanese Yenannually and seek swiftly financial performance stabilization.By strengthening the global organization and enhancing the liner network, the new joint-venturecompany aims to provide higher quality and more competitive services in order to exceed ourclients’ expectations.